Form Your Own Limited Liability Company by Anthony Mancuso

Author:Anthony Mancuso [Mancuso, Anthony]
Language: eng
Format: azw3, pdf
ISBN: 9781413319323
Publisher: NOLO
Published: 2013-09-11T16:00:00+00:00

This paragraph sets up a special rule to handle a distribution of the cash and other assets of the LLC when the business itself liquidates or when a member’s interest is liquidated. It applies the distribution to each member’s capital account, then allows for credits and deductions that may need to be made prior to a final distribution. A final distribution is then made to members with positive account balances.

V. Membership Withdrawal and Transfer Provisions

This section covers members deciding to leave the LLC and restrictions on the transfer of membership.

This is a liberal provision that lets a member bow out from the LLC by giving prescribed written notice. The period required is up to you—you can allow a quick departure, say in 30 days, or require many months’ prior written notice. A typical advance notice period mentioned in LLC statutes is 180 days.

If you want, you may modify this provision. For example, you may choose to limit the circumstances under which members may withdraw, or you may want to assess a monetary penalty if a member leaves too soon. One way is to limit the price for a member’s interest under mandatory buy-sell, or buyout, provisions in your agreement. We don’t include buy-sell provisions of this sort in our simple agreement so you’ll need to consult a lawyer or tax adviser. Or, see Business Buyout Agreements: Plan Now for Retirement, Death, Divorce or Owner Disagreements, by Bethany Laurence and Anthony Mancuso (Nolo), for instructions and buyout provisions for your operating agreement.

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